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ACC 690 Milestone Two Guidelines and Rubric
Overview
The final project for this course is the creation of a white paper consisting of a report and spreadsheets. You will be placed in a scenario in which you will take the role of an associate in a certified public accountant (CPA) firm. The CPA partners in the scenario ask you to create a report for the firm’s clients to help address some of the questions they ask. You will address questions from the firm’s clients by assembling the necessary information in a written report format. Your report should include spreadsheet examples. Topics addressed in the white paper will cover bankruptcy, interim and segment reporting, foreign currency transactions, and nonprofit and governmental accounting.
Your three milestone assignments for this course consist of drafting shorter reports and supporting spreadsheets, which will prepare you for the completion of your comprehensive white paper. You should use your instructor’s feedback from the milestone submissions to improve your final submission.
Prompt
For Milestone Two, draft a short paper and the necessary spreadsheets for Section I, Parts B and C of the final project. Describe interim reporting requirements under generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS), and provide a financial statement example illustrating what the interim report should entail. You will also discuss reporting requirements for business segments and discuss transparency in financial reporting.
Specifically, the following critical elements must be addressed:
- Incorporation: Clients considering structuring their new business as a corporation are aware that there are complex issues to consider when accounting for an incorporated entity. The clients often want information about the following key areas:What interim reporting requirements would the company have as a corporation?Describe the guidance related to interim financial reporting under generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS).Generate a hypothetical financial statement illustrating what that interim reporting entails. Ensure all information is entered accurately.Determine if the interim reporting requirements are the same under GAAP and IFRS. Provide example with academic support in your response.Clients have heard that they may have to report some of their business segments separately if they opt to incorporate.Appraise one of the processes used to identify which segments would have to be reported separately. Provide example with academic support in your response.How is this process effective in supporting transparency in financial reporting? Defend your response with academic support.Provide suggestions to improve this process in an effort to sustain transparency. Defend your rationale with academic support.
What to Submit
Your paper must be submitted as a 2- to 3-page Word document (excluding the title page, reference page, and spreadsheet addendums). Use double spacing, 12-point Times New Roman font, one-inch margins, and at least two academic sources (in addition to your textbook) cited in APA format. Your accompanying spreadsheets must be submitted as Microsoft Excel files.
Milestone Two Rubric
| Criteria | Proficient ( | 10 | Needs Improvement (70%) | Not Evident (0%) | Value | |||
|---|---|---|---|---|---|---|---|---|
| Describes the interim reporting requirements the company would have as a corporation and the guidance related to interim financial statements under GAAP and IFRS | Describes the interim reporting requirements the company would have as a corporation but does not describe the guidance related to interim financial statements under GAAP and IFRS, or description is cursory or has inaccuracies | Does not describe the interim reporting requirements | 15 | |||||
| Correctly generates a hypothetical financial statement illustrating what the interim reporting entails | Generates a hypothetical financial statement illustrating what the interim reporting entails, but there are inaccuracies | Does not generate a hypothetical financial statement | ||||||
| Determines if the interim reporting requirements are the same under GAAP and IFRS and provides an academic example to support response | Determines if the interim reporting requirements are the same under GAAP and IFRS but does not provide an academic example, or example provided does not support response | Does not determine if the interim reporting requirements are the same under GAAP and IFRS | ||||||
| Appraises one of the processes used to identify which segments would have to be reported separately and provides academic example to support response | Appraises one of the processes used to identify which segments would have to be reported separately but does not provide academic example to support response, or appraisal is cursory or has inaccuracies | Does not appraise one of the processes | ||||||
| Evaluates the effectiveness of the process in supporting transparency in financial reporting and academically defends response | Evaluates the effectiveness of the process in supporting transparency in financial reporting but does not defend response, or defense is weak or illogical | Does not evaluate the effectiveness of the process in supporting transparency in financial reporting | ||||||
| Provides suggestions to improve the process for transparency and academically defends rationale | Provides suggestions to improve the process but does not defend rationale, or defense is weak or illogical | Does not provide suggestions to improve the process | ||||||
| Submission has no major errors related to citations, grammar, spelling, syntax, or organization | Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas | Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas | ||||||
| Total: | 100% |
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Bankruptcy and Foreign Currency Transactions
Christine Sarkissian
Southern New Hampshire University
ACC-690: Advanced Topics in Financial Reporting
Professor Wendy Achilles
December 31, 2023
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Bankruptcy
The financial operations of different companies are plagued by different market forces
that predispose businesses to risks related to financial losses and bankruptcy. Challenging
economic situations predispose businesses to scenarios that necessitate restructuring for optimal
debt management. Liquidation and bankruptcy are critical concerns that clients raise during
consultations due to their relevant implications on companies’ financial health. In this view,
clients seeking certified public accountant services must gain more insight into bankruptcy,
foreign currency transactions, accounting practices, and interim and segment reporting.
Forms of Bankruptcy
Esteemed clients should be in a position to understand the three common forms of
bankruptcy in contemporary firms: Chapter 7 bankruptcy, Chapter 11 bankruptcy, and Chapter 13
bankruptcy. Chapter 7 bankruptcy entails paying creditors using asset liquidation strategies.
Notably, it is the most common bankruptcy form due to its alignment with various company
needs. Organizations using this strategy aim to clear their debt to optimize financial operations.
On the other hand, for businesses and entities aiming to restructure and reorganize business
practices rely on Chapter 11 bankruptcy (Corbae & D’Erasmo, 2021). This bankruptcy form
facilitates the effective reorganization of credit repayment plans for gradual debt clearance.
Lastly, clients should also comprehend the relevance of Chapter 13 bankruptcy. This bankruptcy
requires debtors to make monthly payments to a court-appointed trustee who then distributes the
money to creditors. Unlike other bankruptcy and restructuring strategies, Chapter 13 bankruptcy
involves specified periods of debt clearance (3-5 years) (Corbae & D’Erasmo, 2021).
Understanding these forms of bankruptcy and restructuring enables clients to decide on whether
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to file for voluntary or involuntary bankruptcy to facilitate restructuring for financial health
restoration.
Voluntary Bankruptcy
Challenging economic times necessitate clients to file for voluntary bankruptcy after
considering the ethical implications. According to Corbae and D’Erasmo (2021), Chapter 11
bankruptcy allows individuals to file for voluntary bankruptcy. In this view, key points to
consider include the relevance of Chapter 11 bankruptcy form in guiding debt and asset
reorganization. Ethical considerations focusing on how the declaration will affect creditors,
stakeholders, and employees are also relevant (Hynes & Walt, 2019). Vital ethical implications
include considering alternatives before filing for bankruptcy and professional obligations to
satisfy shareholder needs.
Involuntary Bankruptcy
Similarly, challenging economic times may necessitate organizations to file for
involuntary bankruptcy. For instance, in cases where clients are forced to file for bankruptcy by
creditors, it is essential to focus on key concerns. These include loss of company control. This
concern is relevant since it predisposes organizations to impulsive liquidation and asset
management (Hynes & Walt, 2019). Company control is a relevant concern since it influences
the clients’ restructuring approach. In such situations, debt repayment ability demonstration
without incorporating bankruptcy declaration is a solid defense that will enable it to avoid
involuntary bankruptcy.
Challenging financial events necessitate organizations to engage in debt management
strategies that optimize their financial health without filing for bankruptcy. While liquidation and
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restructuring are relevant strategies that clients can engage in to enhance financial operations, it
is essential to understand the concerns and ethical implications related to voluntary and
involuntary bankruptcy. A critical practice implication of this report entails promoting a focus on
clients’ comprehension of relevant defenses to impede involuntary bankruptcy focusing on
demonstrating debt management ability.
Liquidate
In the event of a bankruptcy, the company’s creditors would be keen on understanding
how much they might recover from the assets of the company. The creditors would be interested
in assessing the value of the company’s assets, secured debts (backed by collateral), unsecured
debts, tax owed, wages and priority of payments. Based on the data provided in Exhibit 13.2, the
following calculations may be used to determine how much money creditors would receive
during liquidation:
Before settling for creditors, the company must deal with liabilities with priority. The
liabilities with priority include administrative expenses, salaries payable and payroll taxes
payable, recorded as $20,500, $15,000, and $2,000. The liabilities with priority are subtracted
from the available assets, recorded as $94,500.
Total amount available for pay liabilities with priority and unsecured creditors =$94,500.
Total available to pay for unsecured creditors = $94,500 – ($20,500 + $15,000 + $2,000)
= $57,000
Unsecured claims = Partially secured creditors + Unsecured creditors = $30,000 +
$65,000 = $95,000
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Liquidation = Free assets – unsecured claims = $57,000 – $95,000 = ($38,000)
Therefore, with unsecured claims standing at $95,000 and the available assets to liquidate
for unsecured creditors at $57,000, the creditors in the company would be subjected to a $38,000
loss if the company is liquidated.
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References
Corbae, D., & D’Erasmo, P. (2021). Reorganization or liquidation: Bankruptcy choice and firm
dynamics. The Review of Economic Studies, 88(5), 2239-2274.
https://doi.org/10.1093/restud/rdaa091
Hynes, R. M., & Walt, S. D. (2019). Revitalizing involuntary bankruptcy. Iowa Law Review, 105,
1127-1184. https://ilr.law.uiowa.edu/sites/ilr.law.uiowa.edu/files/2023-02/Hynes_Walt.pdf
